The world is in the midst of a “longevity
revolution.” Between 1900 and 2000,
life expectancy at birth increased from
about 47 to 77 years, and life expectancy
at 65 increased from 12 to 18 years. Furthermore,
James Fries and other have
noted a “compression of morbidity,”
which refers to a reduction in the
amount of disability among older persons
and its compression into fewer
years at the end of life.1 These remarkable
gains in health and life expectancy,
however, are not enjoyed by all. During
the past 30 years, life expectancy
has actually decreased in several
nations including many countries in
sub-Saharan Africa and, until recently,
the Russian Republic. In
the countries in sub-Saharan
Africa, the situation is
particularly dire. In Zimbabwe,
for example, life
expectancy at birth fell
from 56 to 33 years
between 1970 and 2000.

The HIV/AIDS epidemic
accounts for much
of this decline, but poor
countries in Africa and
other parts of the developing
world also suffer
alarming rates of infectious
and parasitic diseases
(IPDs). Many of the
deadliest IPDs, including tuberculosis
and malaria, can be treated with appropriate
medication. Unfortunately, great
poverty and inadequate healthcare systems
make it difficult for people in
poorer countries to receive the medication
they need. To make matters
worse, they often take incomplete
courses of medication – either because
they cannot afford to purchase a complete
course or because they stop taking
medication once they begin to feel better
– which leads to the development of
drug-resistant forms of diseases.

In “Strong Medicine: Creating Incentives
for Pharmaceutical Research on
Neglected Diseases,” Michael Kremer
and Rachel Glennerster argue that the
creation and dissemination of vaccines
that target these diseases would be the
most efficacious means of addressing
the spread of IPDs in the developing
world. In contrast to paying for and distributing
drugs to treat illness, vaccines
do not require an extensive medical or
public health infrastructure. Vaccines
are, as the authors put it, a “cheap, simple
technology.”

In spite of the great potential of this
technology for combating disease, there
is very little research and development
on the diseases that are most prevalent
in poor countries and
there are no vaccines
for schistosomiasis,
malaria, or HIV. The
only existing vaccine for
tuberculosis is limited in
its effectiveness.

Why haven’t pharmaceutical
companies
invested more in the
development of vaccines
for diseases that afflict the
developing world? Kremer
and Glennerster point to a
combination of market and
government failures that
contribute to the inadequate
investment. First, vaccines have what
economists call “positive externalities.”
Because they help halt the spread of disease,
people who do not consume vaccines
benefit from them. As a result,
the private value of a vaccine to the
purchaser is not as great as its social
value. Second, once a vaccine is developed,
it is easy for other companies to
copy it, so the firms that invest in their
development cannot fully capture the
benefits of this investment. Together,
these features lead to market failure and
drug companies do not produce an optimal
quantity of vaccine. To some extent,
the latter problem can be addressed
through patent protection, but this often
leads to a political backlash against the
pharmaceutical companies. Furthermore,
in an effort to keep prices low,
poor countries often refuse to enforce
patent protections.

To correct for the inadequate investment in these technologies, Kremer
and Glennerster call for adoption
of so-called “pull” programs that guarantee
a market for vaccines once they
are developed. The pull approach to
the underproduction of this “international
public good” involves exploiting
the profit motives of pharmaceutical
and biotech companies for public ends
– what economist Charles Schultze calls
“the public use of private interest.”2
Traditionally, governments, multinational
organizations, and private foundations
have attempted to encourage
the development of new vaccines and
other drugs by providing incentives
(e.g., grants, tax credits, etc.) for pharmaceutical
and biotech companies to
invest more in research and development,
but unlike pull strategies, these
“push” strategies pay for research
inputs, not outcomes. In contrast, properly
designed pull strategies reward
pharmaceutical and biotech companies
for developing effective products.

The idea of a pull program is deceptively
simple, but, as Kremer and Glennerster
explain, the execution can be
rather complex. Effective pull programs
require answers to a number of tricky
questions. Which conditions should be
targeted? How much of an investment
is required to induce investment in the
development of new vaccines? How
much is a new vaccine worth? How
can you guarantee an enforceable commitment?
Kremer and Glennerster
address each question in turn and provide
thoughtful responses to each. Furthermore,
they point to historical examples
of successful pull programs,
including the Orphan Drug Act, which
includes push and pull mechanisms, as
evidence that these programs can work
in practice.

Despite the compelling argument
these authors present for such programs,
they admit that, to date, this strategy has
not been adopted. If this is such a good
idea, why hasn’t it been embraced? As
the authors note in the concluding chapter
of the book, these programs face a
variety of political obstacles. First,
although pharmaceutical companies are
likely to respond positively to the incentives
created by pull programs, putting
them in place is not a high priority for
these corporations. They benefit substantially
from existing push programs
that subsidize their R&D efforts without
requiring performance. Furthermore
advocating for pull programs would
force these companies to acknowledge,
publicly, that their R&D decisions are driven
by market considerations.

This book articulates a convincing
strategy for overcoming the collective
action problems associated with private
investment in the development and production
of vaccines to combat disease
prevalent in the developing world. The
World Health Organization and a host
of other organizations and researchers
advocate for the pull strategies described
in this book. Few others, however, make
the case for these strategies as well. The
authors present the case for pull strategies,
introducing several concepts from
economic theory, while making the
book accessible to a lay audience. They
do so without eliminating the subtlety
or complexity of the argument. This is
an important book and a must read for
anyone who is concerned about health
and development.

The remaining challenge is to marry
this vision to an equally effective strategy
for overcoming the collective action
problems associated with getting
wealthy nations to create these programs
in the first place. Kremer and
Glennerster offer a solid analysis of the
political obstacles, but their strategy for
overcoming these obstacles is less well
developed. The authors’ plan for how to
convince international organizations,
governments, or private foundations to
invest billions of dollars in a pull strategy
to develop vaccines for the developing
world is not as compelling as the
rest of their analysis. The next step in the
analysis requires an understanding of
the politics of vaccine development that
is as sophisticated as the economic analysis.
It is important to convince the developed
countries of the world that an
investment in pull strategies is in their
interest. Recent work in public health
and economics, which suggests that
improvements in health may lead to
economic development, may advance
this cause. If nations in the developing
world continue to languish with life
expectancies that are 30 years lower
than the developed world, they will not
be able to participate effectively in the
global economy. Making this case may
not be sufficient to generate action, but
it may provide the basis for broader
agreement.

1 James Fries, “Aging, Natural Death, and the Compression
of Morbidity,” New England Journal of Medicine
303 (1980): 130-5.